Earnings in focus; Peloton, Beyond Meat gain dollar-neutral; Shake Shack tanks outright

By Abigail W. Adams

Portland, Me., May 7 – The convertibles secondary space was firmer on Friday as the tech sector broke its rout with investors showing renewed interest in growth stocks.

The Nasdaq composite was up over 1% in intraday trading before coming in slightly to close the day up 0.88% with a weaker-than-expected April’s U.S. job report boosting the tech-heavy index.

The job report indicated a slower-paced economic recovery than the market anticipated.

However, while the overall market was firmer, there were still pockets of weakness, a source said.

Despite the lack of new paper in the secondary space, with the primary market closed the first week of May, the space was active with earnings spurring trading activity.

There was $736 million on the tape about one hour before the closing bell.

Beyond Meat Inc.’s 0% convertible notes due 2027 were in focus with the notes down outright but improved dollar-neutral as stock continued its downward spiral following a large earnings miss.

Expedia Group Inc.’s 0% convertible notes due 2026 continued to dominate the tape with the notes gaining on both an outright and dollar-neutral basis following the company’s earnings.

Peloton Interactive Inc.’s 0% convertible notes due 2026 broke their downward spiral with the notes improved on an outright and dollar-neutral basis post-earnings.

Shake Shack Inc.’s 0% convertible notes due 2028 tanked on an outright basis as stock got crushed following earnings, with the notes the latest 0% coupon bond to trade down to the 80s.

Beyond Meat’s earnings

Beyond Meat’s 0% convertible notes due 2027 dropped outright but improved dollar-neutral as stock continued its downward spiral following a large earnings miss.

The notes were changing hands at 88.875 early in Friday’s session.

However, they pared their losses as the session progressed and were changing hands at 89.25 in the late afternoon.

The notes improved about 0.25 point dollar-neutral, a source said.

The notes were active with more than 21 million in reported volume.

Beyond Meat’s stock traded to a low of $106.91 and a high of $116.88 before closing the day at $110.72, a decrease of 6.99%.

Stock has dropped more than 15% since Monday in the run-up to the plant-based food company’s earnings report.

Beyond Meat reported a large earnings miss after the market close on Thursday.

The company reported losses per share of 42 cents versus analyst expectations for losses per share of 27 cents.

Revenue was $108.2 million versus analyst expectations for revenue of $114.35.

Expedia in focus

Expedia’s 0% convertible notes due 2026 were improved on both an outright and dollar-neutral basis following the online travel company’s earnings report.

The 0% notes gained 3 points outright with stock up about 5%.

They were changing hands at 109.875 versus a stock price of $175.75 in the late afternoon, according to a market source.

The notes gained about 0.5 point dollar-neutral.

Expedia continued to see heavy volume with more than $28 million on the tape in the late afternoon.

Expedia’s stock traded to a high of $180.05 and a low of $172.01 before closing the day at $173.46, an increase of 5.24%.

Expedia reported a loss per share of $2.02 versus expectations for a loss per share of $2.30.

Revenue was $1.25 billion versus expectations for revenue of $1.11 billion.

Peloton improves

Peloton’s beleaguered 0% convertible notes due 2026 broke their downward trajectory with the notes improved on both an outright and dollar-neutral basis following the company’s earnings report.

The 0% convertible notes traded as high as 90 with stock climbing up to $92 early in the session. However, the notes came in alongside stock as the session progressed.

They were changing hands at 89.5 versus a stock price of $84.55 in the late afternoon.

The 0% notes improved about 1 point dollar-neutral.

The notes saw about $20 million in reported volume.

Peloton’s stock traded to a high of $92.02 and a low of $82.91 before closing the day relatively unchanged at $83.81, an increase of 0.036%.

Stock initially posted large gains after a surprise earnings beat.

The fitness and media company reported a loss per share of 3 cents versus analyst expectations for a loss per share of 12 cents.

Revenue was $1.26 billion versus the $1.1 billion expected.

While Peloton beat on both the top and bottom lines, it reduced its forward guidance due to the recall of its treadmill product.

Peloton’s stock sank almost 15% over the past week after the company agreed to recall its treadmills, an action that was urged by the Consumer Product Safety Commission in late April.

Shake Shack drops

Shake Shack’s 0% convertible notes due 2028 became the latest No-No, or 0% convertible bond that priced at par, to drop into the 80s as stock tanked on the heels of the fast-food restaurant chain’s earnings.

The 0% convertible notes dropped more than 6 points outright.

They were changing hands at 87.5 versus a stock price of $91.07 in the late afternoon.

However, the notes were holding on a dollar-neutral basis with the notes improved about 0.25 point, a source said.

Shake Shack’s stock traded to a high of $95.98 and a low of $88.88 before closing the day at $89.48, a decrease of 15.28%.

Stock was crushed despite a large earnings beat.

Shake Shack reported earnings per share of 4 cents, which beat expectations for a loss per share of 8 cents.

However, revenue of $155.3 disappointed with analyst expecting revenue of $161.8 million.

Mentioned in this article:

Beyond Meat Inc. Nasdaq: BYND

Expedia Group Inc. Nasdaq: EXPE

Peloton Interactive Inc. Nasdaq: PTON

Shake Shack Inc. NYSE: SHAK

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